House Democrats are discussing a crypto market structure bill with a bigger role for the SEC and ethics limits on Trump.

Table of contents

  • Crypto bill talks could restart at the next US Congress by Jan. 3, 2027
  • House Democrats proposed a new bill based on Rep. Maxine Waters' Crypto Investor and Consumer Bill of Rights
  • The law could see the SEC have a bigger regulatory role than the CFTC
  •  Tougher ethics limits for Trump and other officials were proposed

House Democrats are reportedly in talks to write their CLARITY Act draft for the next Congress, crypto journalist Eleanor Terrett reported. The talks began after Democrats won control of Congress in the Nov. 3 midterm elections.

Democrats to revive CLARITY Act talks

Terrett reported that the plan would build on Rep. Maxine Waters’ Crypto Investor and Consumer Bill of Rights, with the new legislation expected to reach the House floor after the next Congress convenes on Jan. 3, 2027.

The proposal would combine provisions that were not adopted during negotiations on the CLARITY Act. This includes Democratic provisions Waters proposed and measures Senate Democrats negotiated with the Republicans right before the bill failed in September.

One key change is the designation of power between the SEC and the Commodity Futures Trading Commission (CFTC). Under the new plan, the SEC could play a bigger role in overseeing crypto markets, at the expense of the CFTC.

Meanwhile, a majority of crypto firms prefer the CFTC having more control over markets amid its favorable stance towards digital assets.

Terrett also wrote that more ethics rules could be added to the CLARITY Act. These could stop senior officials and their families from starting, promoting, or profiting from crypto businesses while in office. Waters initially introduced the Stop TRUMP in Crypto Act amid concerns that Trump is using his power to profit from crypto.

Democrats gain leverage after midterms sweep

Waters is the top Democrat on the House Financial Services Committee and is currently in line to take over the chair in January from Hill. Bloomberg Law reported on Wednesday that the new majorities give Democrats leverage over the CLARITY Act, starting with tougher ethics rules aimed at Trump's ventures.

Sen. Ruben Gallego of Arizona, a member of the Senate Banking Committee, told Bloomberg Law that the industry and the Republicans are “screwed up,” adding that the previously proposed bill that stalled in September “was the best bill” the industry could have gotten.

TD Cowen analyst Jaret Seiberg also wrote on Tuesday that the Democratic sweep closes the door on the CLARITY Act for at least two years. He said the insistent probe on the Trump family's crypto ventures makes progress on the bill very unlikely.

“Democrats will likely investigate Trump, including his crypto entanglements. We see this as souring the political environment for crypto, which is why we do not expect the Clarity Act to pass over the next two years.”

“Democrats will likely investigate Trump, including his crypto entanglements. We see this as souring the political environment for crypto, which is why we do not expect the Clarity Act to pass over the next two years.”

Republicans in response described the planned bill as a "messaging bill." They said it intentionally targets the President’s crypto businesses and does not set out rules that both parties could back.

Michael Adeleke is a crypto journalist at CoinCodex with more than three years of experience in crypto journalism. He provides crypto news and market analysis in the easiest way possible to help readers know the latest updates in financial markets. With a background in engineering, he brings strong research and analytical skills to his work.